Paul's Contractual Rights Evaluation

Introduction

(a) Advice to Paul as to his contractual rights.

The issue with respect to Paul is whether Paul is entitled to claim damages from Belinda for the injuries caused to him by the accident due to the storm. The law is provided in Consumer Rights Act 2015 (CRA 2015). Also applicable in this scenario are principles related to damages.

CRA 2015, Section 49 provides that the services must be provided with reasonable care and skill. CRA 2015, Section 50 provides that statements made to the consumer at the time when the consumer is in the process of deciding whether to enter into the contract or not, are binding contractual terms, the breach of which leads to the breach of contract. One question that may arise here is with respect to the statement made by Belinda to Paul with regard to the exclusion clause: “Don’t worry, you couldn’t be safer at home than here on Oropesa.” The question is whether this is a term or a representation. If it is a term, then Paul can claim breach of contract and demand expectation loss. If it is a representation, then Paul can claim misrepresentation and claim reliance loss. Statements made just prior to the entering into the contract can be inferred as terms and not representation. Statements made by someone who is in a position to know more due to skill and knowledge are also likely to be considered as terms and not representations. Even if the actual notice stated that sea is hazardous, the statement made by Belinda will be considered to be a term because of her special knowledge.

With regard to the statement in the notice, it can also be considered to be an unfair contract term. The statement made on the printed pamphlet advertising cruises on the Oropesa states: “I am aware that the sea is an extremely hazardous environment and that while I am at sea I may suffer death or injury and that my possessions may also be lost or damaged. While I am on this boat, I accept sole responsibility should, in any event, I suffer death or injury, or should my possessions be lost or damaged.” This is an exclusion clause that is inserted into the contract. The question is whether this exclusion clause is proper and can be enforced. There are two points that are relevant here: the doctrine of notice and the construction of the clause (contra proferentum). It may be stated by Belinda that she gave notice of the exclusion clause and that the notice was clearly and unambiguously given, which satisfies both doctrine of notice, as well as clause construction. However, the clause will still be considered invalid in light of CRA 2015 provisions discussed below. Finally, if there is an inconsistency between the exemption clause and an oral undertaking, the exemption clause is overridden.

CRA 2015, Part 2 and Schedule 2 have re-implemented the Unfair Contract Terms Directive 93/13/EEC into UK law and this has applied the law to both consumer contracts as well as notices, such as the one that Paul read in the pamphlet. Thus, any announcement or other communication meant to be read by consumers will be covered under Section 62 of CRA 2015. Such notices have to satisfy the test of fairness in Section 62(4), which provides that a term is unfair if “contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” However, it may be noted that Section 65 is applicable here as per which negligence liability is excluded. This is important in the context of this case scenario because Belinda has purported to have excluded her liability for death or injury in the notice. Section 65 of the CRA 2015, specifically provides that there is a bar on exclusion or restriction of negligence liability as per which a trader cannot exclude or restrict his liability for death or personal injury resulting from negligence. Moreover, if such exclusion clause is provided in the notice or contract, it does not mean that the person who knew about such risk has voluntarily accepted it. For the purpose of Section 65, negligence is defined as breach of an obligation to take reasonable care or exercise reasonable skill in the performance of a contract and a common law duty to take reasonable care or exercise reasonable skill.

In this case, the duty to exercise proper care and skill is with Belinda as per the CRA 2005, Section 65. Belinda was negligent because she did not pay proper attention to the changing weather due to which when sailing, Oropesa was caught in a sudden, violent storm. During the storm, Paul was swept off the boat by a large wave. His life preserver kept him afloat until he was swept on to a rocky shore where he suffered several injuries including a broken arm. Therefore, the injury to Paul is the result of Belinda’s negligence. Belinda cannot take the justification of the consumer notice under which she sought to exclude her liability because such exclusion is barred in Sections 62 and 65.

Paul can ask for damages in this situation as there is a breach of contract by Belinda and that has led to his injury. Generally, damages in contractual cases are given when there is some economic loss, but damages can also be given for personal injury. This has been held in Forster v. Pugh, in which compensatory damages were awarded for injury. Therefore, there is a strong case in Paul’s favour for claiming damages from Belinda.

(b) Critically evaluate what contractual rights and remedies might be available to Catherine and David.

Catherine: Non-pecuniary losses

With regard to Catherine, the issue is whether she is entitled to damages for her experience on board the cruise. As Catherine was not hurt in the storm, the question may arise as to whether she can claim any compensation. The principle that in relevant in her situation is compensation for distress and loss of enjoyment caused by breach of contract.

In general, there is no recovery of damages for non pecuniary losses arising out of breach of contract. However, the claimant can recover for loss of enjoyment or mental distress caused by breach of contract. The breach of contract may have led to physical discomfort, which may have led to mental distress as well. In Watts v Morrow, the court allowed damages for physical discomfort caused by breach of contract.

Another ground on which Catherine may claim compensation is that the contract was particularly for the purpose of relaxation and enjoyment, in which she was disappointed. In Farley v Skinner, the court allowed damages for distress, where an important object of the contract was to provide pleasure or relaxation to the injured party. In this case, physical distress was treated as consequential loss and the important point in this context was not the nature of the distress suffered, but the cause due to which the distress was suffered. If the cause of the distress is the breach of contract, then the compensation for the same can be recovered by the injured party. In this case, the purpose of going on the cruise was relaxation and in this expectation, the cruise had disappointed. Therefore, Catherine can claim damages from Belinda for disappointment in her expectation for relaxation and enjoyment.

Disappointment of expectations in holidays and cruises has been recognised in authorities as relevant to awarding damages to the injured party and this can be taken in Catherine’s favour under the scenario.

In Jarvis v Swan Tours, a case involving a disappointing holiday, Lord Denning MR held that the injured party could not only recover damages for the cost of holiday, but also for disappointment, distress, and frustration caused by the breach. This line of authorities indicates that although non pecuniary losses are not generally compensated for by damages of breach of contract, there are exceptional circumstances wherein the court may award damages for distress and loss of enjoyment. A recent case makes this principle more relevant to the present case scenario with respect to Catherine. In Milner v Carnival plc, the facts of the case were that Mr and Mrs Milner booked a cruise trip, which was ended midway by them because of the disappointing experiences and loss of expectation when on cruise. The court held that they were entitled to a compensation for distress and inconvenience.

Applying the principles laid down in several authorities to Catherine’s situation, it can be seen that Catherine had decided to board the cruise for the purpose of relaxation and she was instead made to go through physical and mental distress. Although her loss is non-pecuniary, she can claim damages under the exceptional circumstances as laid down in several authorities.

David: Refund

The issue with regard to David is whether he is entitled to get his money back from Belinda after he changed his mind about going on the cruise trip. The law that is applicable in this case is the Consumer Contracts Regulations 2013, which lays down the principles applicable for cancellation of services.

Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, services that the consumer wishes to cancel can be cancelled when the consumer changes his mind. A period of 14 days is provided to the consumer to change his mind. However, certain services cannot be cancelled, such as, those that are for specific dates, such as hotel bookings, or car hire. The question is whether this law can be applied to David’s case.

The Regulations can be applied in David’s case as David spoke to Belinda for the cruise only after seeing a sign at the local marina advertising the 3 hour sailing cruises on Belinda’s boat, the Oropesa, for £75 per person. Belinda agreed to take him and a couple of his friends along with a group going sailing that afternoon. Paul returned to the marina after lunch, saw Belinda by the boat, and gave her the £225. It is only after this that he was shown the document with the exclusion clause in it. Therefore, all the information regarding the cruise was not given to him at the time of making of agreement, but at a later point. The contract between David and Belinda is an off premises contract because the offer was made by David in the simultaneous physical presence of Belinda and himself, in a place that is not the business premises of the trader. The business premises of the trader include immovable retail premises where the activity of the trader is carried out on a permanent basis, or any movable retail premises where the activity of the trader is carried out on a usual basis. Therefore, David having made the offer at the Marina, which is not the business premises of Belinda, the contract is off premises contract.

Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, Schedule 2 provides the list of items that need to be informed to the consumer in an off premises contract. The information includes the main characteristics of the goods or services, to the extent appropriate to the medium of communication. The characteristic of there being some hazard in the activity was not mentioned by Belinda at the time when the offer was made by Paul and was only disclosed to Paul after taking his money. Moreover, David did not sign the document in which the exclusion clause was written. The facts of the scenario clearly show that upon reading the statement in the notice, David changed his mind and decided not to go on the boat trip and also demanded his money back. Just below the statement, there was a space for a signature. This implies that the contract depends on the signing on the notice after reading the notice.

Therefore, it is also important to note that David did not sign on the contract. David may contend that there is no contract with Belinda and until he signed the standard form contract, which is a “pre-printed form contract with terms pertaining to the contract,” such as the one in the notice. Therefore, it can be argued that there is no contract between David and Belinda.

Bibliography

Books

Macdonald E and Atkins R, Koffman & Macdonald’s The Law of Contract (8th Ed., Gosport: Oxford University Press 2014)

Poole J, Textbook on Contract Law (Oxford University Press 2016).

Stone R and Devenney J, The Modern Law of Contract (Routledge 2017).

Tillson J, Law Express: Commercial and Consumer Law (Pearson 2018).

Journals

Bakos Y, Marotta-Wurgler F and Trossen DR, ‘Does anyone read the fine print? Consumer attention to standard-form contracts’ (2014) 43(1) The Journal of Legal Studies 1, 1.

Pearce D and Halson R, ‘Damages for Breach of Contract: Compensation, Restitution and Vindication’ (2008) 28(1) Oxford Journal of Legal Studies 73.